Digital Transactions Authoritative, insightful and timely information for payments professionals
When it comes to making a purchase, who doesn’t use a credit or debit card?
Most of the world, that’s who.
While paying with a credit card is standard in the United States and much of the Western world, that’s definitely not the global norm. It’s estimated that less than 18% of the world’s population can pay by plastic.
Before online commerce exploded, payment options were mostly limited to cash, check, or credit. But today’s shoppers are finding new ways to pay for goods, and their digital-payment methods vary widely by region.
Alternative payments—those made without credit or debit cards—account for about half of all online transactions, according to industry estimates. In the United States, that includes Apple Pay, PayPal, and other mobile-payment and digital-wallet services. Hundreds of other local payment methods are gaining ground globally. For merchants that accept only credit cards online, that represents a tremendous loss of potential income, especially for those selling internationally.
Local payment types are often country-specific and cater to those without credit cards and/or bank accounts. In China, for example, Alipay and WeChat Pay enable people to use one app to pay for everything from electricity to street food. And Brazil’s Boleto cash and voucher system allows for cash payments.
As commercial borders disappear and merchants grow increasingly dependent on international sales, businesses that don’t accept payment methods in an increasingly globalized marketplace will feel the effect on their bottom lines.
Customers want online transactions to be frictionless, and creating that seamless experience is key to an online retailer’s success. After a single negative shopping experience, 57% of consumers will stop shopping at an online merchant or cancel a digital service entirely. And almost half (47%) will leave a negative review or tell a friend about the bad experience.
Enabling local payments is one way to invoke an easy shopping experience within your digital landscape. Benefits of doing so include:
• Enabling global customers to know what the item they’re buying costs in their native currency, not in the currency of the merchant’s country;
• Connecting people without bank accounts to e-commerce via mobile devices or cash payments, allowing them to make online payments using digital wallets or vouchers;
• Empowering customers to know their preferred payment method will be accepted by a merchant no matter where.
Multiple organizations offer merchants the ability to accept local payments, but that’s just a starting point. To get the full benefit of alternative-payment acceptance, merchants should also be able to display prices in buyers’ local currencies and aggregate all payments, regardless of their country of origin, into one daily deposit for easy reconciliation.
Merchants must know where their customers are and which countries are showing the largest cart-abandonment rates. Doing so provides the insight needed to alter product offerings, pricing, and placement to better reflect how different cultures shop. When businesses are ready to add new currencies and countries, they need a simple application programming interface that can keep payment capabilities relevant and up to date.
Whether your target customers reside in neighboring regions or on the opposite sides of the earth, leveraging alternative payments can strengthen your digital commerce presence and better your business. Doing so will help grow your customer base, improve your bottom line, and position your business for global success.
—Jean Harvey Johnson is vice president, global alternative payments, at Fiserv Inc., Brookfield, Wis. This article appears in slightly different form at the Fiserv Web site.
